FIRST DIVISION

[G.R. No. 14594. January 29, 1920.]

EDUARDO RIVERA, ANACLETO AGUINALDO, RUFINO SALAW,

JACINTO SISON, ELEUTERIO DE LA CRUZ, QUITERIO VICTORINO
and AGUEDA DE LA CRUZ , plaintiffs-appellants, vs . THE ROMAN
CATHOLIC ARCHBISHOP OF MANILA , defendant-appellee.

Jose Varela Calderon for appellants.

Hartigan & Welch for appellee.

SYLLABUS

1. PROPERTY; POSSESSION; GOOD FAITH; IMPROVEMENTS. — In order to

administer complete justice between the proprietor of land and the possessor in good
faith thereof, in such a way as neither the former nor the latter may enrich himself of
that which does not belong to him, nor any one of them remain prejudiced by the
vagueness and casuistry of the rules established to give each one of them that to which
they are entitled, it was necessary to use the right epithets which in a clear and
unmistakable manner, would set forth the different character regulating their respective
rights. Hence, in writing articles 453 and 454 of the Civil Code, the legislator correctly
employed the expressions "necessary expenditures," "useful expenditures." and
expenditures purely for ostentation and mere pleasure."
2. ID.; ID.; ID.; ID. — The Civil Code gives the possessor in good faith greater
indemnity in case he has incurred on the land necessary expenditures than in the case
he has only incurred useful expenditures or those purely for ostentation and mere
pleasure and also greater indemnity in case expenditures are useful than in case they
are purely for ostentation and mere pleasure. The reason is because necessary
expenditures are incurred for the preservation of the realty in order that it may produce
the natural, industrial and civil fruits it ordinarily produces and expenditures purely for
ostentation and mere pleasure are not considered by the Civil Code as leading to the
production of all of the aforesaid three kinds of fruits: natural, industrial and civil, but
only of the civil fruits.
3. ID.; ID.; BAD FAITH. — Possessors de facto of a piece of land or realty
exclusively belonging to a third person with whom said possessors have not entered
into a contract of lease or paid rent or canon thereto, are considered to have entered
into the possession of said land in bad faith and only to pro t thereby without the
consent of its true owner — an act evidently illegal which constitutes an usurpation,
inasmuch as according to article 445 of the Civil Code, possession de facto cannot be
recognized in favor of two different persons."
4. ID.; ID.; ID.; IMPROVEMENTS. — According to article 364 of the Civil Code,
bad faith on the part of the owner is deemed to exist in permitting the usurper and
possessor de facto of a realty to commence and carry out the construction of any
building thereon — an act which must be proved at the hearing, for the absence of said
proof shows that, with the unlawful trespass upon the realty, the building or
construction was commenced without the knowledge and consent of the owner
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 thereof.

DECISION

TORRES , J : p

This case was originally instituted in the Court of First Instance of Rizal upon a
complaint dated on February 2, 1916, in which the plaintiffs alleged that they have been
in possession, in good faith, of certain parcels of land of the estate called "Hacienda de
Sta. Clara," situated in the barrio of Dampalit of the municipality of Malabon, Rizal; and
that they have been in possession and enjoyment of several sh ponds constructed by
them-on said land up to the time they were defeated in said possession by the
defendant entity "The Roman Catholic Archbishop of Manila," which was declared the
absolute owner of the aforesaid "Hacienda de Sta. Clara" in the decision of this High
Court on August 5, 1915, in the case (R. G. No. 8719) 1 brought by said entity for the
registration of the "Hacienda de Sta. Clara" in its name. Plaintiffs pray that said entity be
ordered to pay them the value of the sh ponds aforesaid and that their right of
retaining said portions of the land occupied by them be declared subsisting until they
have been fully paid therefor.
To the foregoing complaint the defendant entity interposed a demurrer which
was overruled. Defendant excepted to this ruling and afterwards led an answer
denying generally all the material averments of the complaint; but later asked the court
to order the plaintiffs to le a bill of particulars of the facts alleged in their complaint.
This petition having been granted by the court and the bill of particulars aforesaid
having been led by the plaintiffs, the defendant led an amended answer denying
generally all the material averments of the complaint and alleging as special defense
that the subject-matter of this case is res judicata; that the plaintiffs' possession of the
land mentioned in the complaint was never in good faith; and that if plaintiffs had made
any improvements on said land they never did them in good faith. Defendant alleged as
counterclaim that before the ling of the complaint in question, the plaintiffs had been
occupying and enjoying for many years the land belonging to the defendant entity and
described in the complaint; that said plaintiffs pro ted of the fruits and improvements
on said land to the damage of the defendant without having ever paid any rent or canon
therefor notwithstanding the demands made upon them for said purpose; and that
during all the time plaintiffs were in possession and enjoyment of the land and fruits
thereon, said canon or rent amounts to seventy- ve thousand pesos (P75,000).
Wherefore, defendant prayed that plaintiffs' prayer in their complaint be denied and that
judgment be rendered condemning them to pay the defendant, jointly and severally, the
sum of seventy-five thousand pesos (P75,000) and to pay the costs.
Upon plaintiffs' request the defendant led a bill of particulars of the facts
alleged in the counterclaim.
After hearing the case and the evidence submitted by both parties, the court
rendered judgment absolving the defendant entity from plaintiffs' complaint and the
latter from the formers counterclaim, without any findings as to the costs.
To this judgment counsel for the plaintiffs excepted, at the same time asking for
a new trial which was denied with his exception.
He then interposed his appeal to this court by ling the corresponding bill of
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 exceptions which, after having been approved by the lower court, was forwarded to the
clerk of this court together with all the evidence taken upon the trial.
From the foregoing allegations of the parties, from the agreed statement of facts
(rec., pp. 1-2), and from the statements made at the hearing by counsel for the plaintiffs
(rec., pp. 4-8), it appears that there is no question about the fact that prior to the year
1915, the plaintiffs constructed sh ponds in the "Hacienda de Sta. Clara" the
registration of which in the name of the defendant entity was decreed by this court in
the decision rendered in the Registration Case No. 8719, notwithstanding plaintiffs'
opposition; that ever since the construction of the sh ponds aforesaid, the plaintiffs
have been in possession and enjoyment thereof up to the present time (the date of this
decision); and that said plaintiffs has never entered into any contract of lease with the
defendant, the absolute owner of the land aforementioned, nor paid the latter for the
use, occupation, and enjoyment of the land upon which said sh ponds were
constructed.
The controversy involved i8 whether by appropriating the sh ponds in question,
which had been constructed upon its land, the defendant is obliged to indemnify the
plaintiffs for their value or price, or whether the plaintiffs have the right to compel the
defendant, in case the latter does not want to take the sh ponds, to sell to them said
land at P0.04 per square meter as ' xed by them in their brief (pages 29-30, plaintiffs'
brief).
The parties admitting that the defendant entity is the owner of the land upon
which the sh ponds in question have been constructed, articles 361 to 364 and 451 to
457 of the Civil Code are perfectly applicable to the instant case. Said articles de ne
the rights of the owner of a piece of land upon which anything has been built, sown, or
planted by another according as whether both acted in good or bad faith and whether
what has been built, sown, or planted were necessary, useful or purely for ostentation or
mere pleasure. Therefore, in order to decide the controversy, the rst thing that will
have to be determined is the nature of the fish ponds in question.
From the testimony of Ceferino Cacnio, plaintiffs' witness, it appears that sh
ponds are built by digging into the land and putting in rows the earth that has been dug
out in order to form with it dikes or embankment for holding the water in which the sh
will be kept (rec., p. 5). There is nothing in the record expressly showing that the sh
ponds in question have been built in this manner, but this witness Ceferino Cacnio
having been the one who made the sketch of said ponds appearing in the record, and
who appraised their costs or value by referring to the manner of construction aforesaid
(rec., p. 5, Exhibit B, rec., p. 44), it is evident that the sh ponds in question belong to the
class mentioned by said witness. Such being the case, the conclusion must be that the
expenditures for their construction should be classi ed as useful, expenditures
mentioned in the second paragraph of article 453 of the Civil Code, because since all of
the expenditures of man are either useful (utiles) or useless or unnecessary (inutiles),
and since it is obvious that the sh ponds in question are neither useless nor purely for
ostentation or mere pleasure then said expenditures are useful.
In dealing with the foregoing point the litigants in their respective briefs talked
about improvements, their permanent and temporary character, the accretion of the
soil through the work of man, the greater or less usefulness of the land for one purpose
or another, and the increase or decrease in its value, and cited several decisions. But it
does not appear that they ever tried to inquire and investigate, with the aid of the
science of logic and hermeneutic the true meaning of article 453 of the Civil Code, the
only article decisive upon the foregoing controverted point.
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 The foregoing article 453 speaks of necessary and useful expenditures and not
of improvements, nor the increase in value, nor the accretion of something new, nor any
thing of those mentioned in the briefs of the parties. A thing may be an improvement or
an accretion of something new upon the land; may increase the value of said land; and
still it may not be comprised under any of the phrases necessary expenditures" and
"useful expenditure" employed in article 453 of the Civil Code, because it is not
impossible that said thing may be constructed purely for ostentation or mere pleasure
since constructions of this nature as well as those which are necessary and useful can
be considered as improvements and can increase the value of the land.
In trying to adjust the rights of the owner and the possessor in good faith of a
piece of land, the learned Spanish legislator knew very well that, in order to administer
complete justice to both of them in such a way as neither the one nor the other may
enrich himself of that which does not belong to him, nor remain prejudiced by the
vagueness and casuistry of the rules he was going to enact, it was necessary to use the
right epithets which, in a clear and unmistakable manner, would describe and de ne the
different characters regulating their respective rights. Hence, in writing articles 453 and
454 of the Civil Code, the legislator correctly employed the expressions "necessary
expenditures" ("gastos necesarios") "useful expenditures" ("gastos utiles") and
"expenditures purely for ostentation and mere pleasure" ("gastos de puro lujo o mero
recreo").
If the owner of land has any interest therein, it is undoubtedly because said land
produces for him some bene t or fruit which may be great or small according as the
expenses incurred by the possessor thereof may have been the cause of the land
producing all kinds of fruits of great importance: natural, industrial and civil, or only one
or two of these kinds which are of little importance; and, consequently, the indemnity to
be refunded the possessor in good faith will also be great or small according as the
expenses incurred by him may have resulted in the production of all said kinds of fruits
or only part of them. Hence, the Civil Code gives the possessor in good faith greater
indemnity in case he has incurred necessary expenditures than in case said
expenditures are only useful or purely for ostentation and mere pleasure, and also
greater indemnity in case said expenditures are useful than in case they are purely for
ostentation and mere pleasure. Why? Because necessary expenditures, inasmuch as
they redound to the preservation of the realty, render said realty capable of continually
producing the natural, industrial and civil fruits it ordinarily produces — fruits which the
owner would not be able to gather if the land would be rendered unproductive. Useful
expenditures also give rise to all these kinds of fruits, but the law considers them rather
inferior than necessary expenditures for the reason that the latter preserve the realty
and are therefore the source of the producing agency and its fruits, while the former
(useful expenditures) are only the source of the fruits.
Expenditures purely for ostentation and mere pleasure are considered by the Civil
Code of little importance for the reason that they do not have nor will have to do with
the production of all the three kinds of fruits we have been speaking about, but only of
the civil fruits. That such is the fundamental reason of article 454 of the Civil Code not
the least doubt can be entertained, for the words "purely for ostentation and mere
pleasure" ("de puro lujo o mero recreo" ) employed by the code are so clear and
unmistakable that they absolutely negative the capacity to produce industrial and
natural fruits. Thus, in laying down a rule to distinguish useful expenditures from those
purely for ostentation and mere pleasure, the great commentator Manresa has truly
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 said that "expenditures purely for ostentation and mere pleasure either cannot in uence
the production of natural and industrial fruits or do diminish them; they can, however,
influence the production of the civil fruits." (Manresa's Com. of Civil Code, vol. 4, p. 262.)
Applying the foregoing considerations to the instant case, it clearly appears that
the land in this case on which the sh ponds in question are built, gives its owner
bene ts called industrial fruits which it would not give without the sh ponds aforesaid.
True it is that without the sh ponds the owner of the land could have utilized it for
agricultural purposes. But then the owner would have to incur some and costly
expenditures, while with the sh ponds already built he would not have to do anything
more than to reap its fruits without having incurred any expenditures. And it is this
which the law considers unjust, to wit, that the owner of the land would enrich himself
with the industrial fruits thereof, produced by the useful expenditures disbursed by the
possessor in good faith.
Having shown that the sh ponds presuppose the disbursement of useful
expenditures payable to the possessor in good faith, we pass on to elucidate the
question whether or not the plaintiffs have been possessors in good faith.
Plaintiffs have presented in evidence Exhibit A (rec p. 20), which is the decision
rendered by this Court in the registration case No. 8719 of August 5, 1915, declaring
the defendant entity owner of the lands on which the sh ponds in question were built.
But from this exhibit it appears that the plaintiffs have never been in possession of
these lands in good faith in order that they can claim the right of indemnity for the
expenditures incurred in the construction of these fish ponds.
In fact, the defendant entity herein was the petitioner in said registration
proceeding and the plaintiffs herein were the oppositors then. These plaintiffs in that
registration case alleged having been in possession of the sh ponds now in question
under all the conditions required by law for the prescription of title (p. 29, Exhibit A). But
this Court said that said allegation had not been duly proven (pp. 29-30, 36, 41 and 43,
Exhibit A) and consequently dismissed their opposition.
Moreover, in the same decision it was held that the defendant entity has been in
possession of the lands of "La Hacienda de Sta. Clara" publicly and under claim of
ownership from time immemorial (pp. 31-32, Exhibit A) without having ever been
interrupted thereon except once, whereby it had to institute in 1905 the corresponding
action of revindication against the persons unlawfully withholding its possession, three
of whom were the plaintiff herein, Eduardo Rivera, Ru no Salaw, and Anacleto
Aguinaldo, and that said defendant entity has always exercised over said lands acts of
ownership, (p. 35, Exhibit A).
It follows, therefore, that the same decision presented by the plaintiffs proves
that the defendant has been in possession of the lands on which the sh ponds in
question are built, publicly and under claim of ownership, and that the plaintiffs, if they
have once possessed certain parcels of these lands, did not do so under claim of
ownership. In truth, if the plaintiffs had been in possession of these lands under claim
of ownership, this Court would not have decreed their registration in the name of the
defendant entity.
Now then, if the plaintiffs did not possess the lands on which the sh ponds are
built under claim of ownership, it is evident that at most they did possess them as mere
usufructuaries, and inasmuch as in the present case counsel for the plaintiffs admit that
neither these plaintiffs nor their constituents entered into a contract of lease with, nor
paid rent to, the defendant, it follows that the plaintiffs took possession of these lands
only to pro t thereby without the consent of their true owner — an act evidently illegal,
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 which constitutes a real bad faith.
Moreover, according to article 445 of the Civil Code "possession de facto cannot
be recognized in favor of two different persons." Hence, if this Court recognized the
defendant's possession and not plaintiffs' possession, it was because the latter, if it
really existed, was illegal, i. e., was a possession in bad faith.
What remains for us to determine is whether the defendant entity also acted in
bad faith by knowingly permitting the construction of the sh ponds in questions
(article 364 of the Civil Code).
Regarding this point (defendant's bad faith) the record does not show any proof.
The appellants pretend to infer it from the fact that the sh ponds have been in
existence for many years, and argue that the defendant could not have ignored their
existence during that long period of time.
But the foregoing argument is unfruitful. If the appellants want to deduce the
foregoing conclusion (defendant's bad faith) from the fact that it would have been
impossible for the defendant to ignore the existence of the sh ponds, then said
inference is not supported by law; because according to article 364 of the Civil Code,
bad faith on the part of the owners is deemed to exist not in permitting or tolerating the
existence of a construction on his land — this is merely an act of kindness for which the
possessor should be thankful — but in permitting the possessor to commence or begin
and to carry out said construction. If the latter is what the appellants mean, then they
do not have any support upon evidence; because it has not been shown that at the
moment the construction of the sh ponds were commenced, the defendant had
knowledge thereof and, knowing it, did not oppose said construction. This fact cannot
be deduced from the circumstances surrounding the case, inasmuch as the
construction of said sh ponds could have been commenced and nished during the
time the defendant entity could not have notice thereof, and it has not been shown that
there are facts pointing out to the contrary. The plaintiffs did not even try to prove the
year and month when said sh ponds were built or indicate some circumstances which
might have accompanied in the construction thereof, suggestive of the idea that the
defendant entity knew or must have known that the fish ponds were being built.
In any way, it is therefore evident that the instant action is absolutely devoid of
any foundation, and is so devoid that from the plaintiffs' own evidence, specially Exhibit
A upon which they have relied and do rely so much, it appears that their contention is
untenable. We have examined with great care plaintiffs' Exhibit A with their brief before
us looking in said Exhibit A for any phrase, word, or sign indicative, at least indirectly, of
the good faith plaintiffs allege to have been established in the aforesaid decision, but
we have not found any thing favorable to but all against the plaintiffs.
For the foregoing consideration whereby all the assignments of errors, alleged to
have been committed in the judgment appealed from, have been refuted, we arrive at
the conclusion that plaintiffs' contentions have not been fully established; and that the
defendant not having insisted upon its counterclaim, the judgment appealed from is
a rmed, as we do hereby a rm it, with the costs of this instance against the plaintiffs-
appellants. So ordered.
Arellano, C. J., Johnson, Araullo, Street, Malcolm and Avanceña, JJ., concur.
Footnotes
1. Not published.

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